Ladies and Gentlemen,
The past year was very demanding for the entire region of Central and Eastern Europe, Poland and the Bank Pekao S.A. Capital Group. The gradual recovery of economic activity after the Covid-19 pandemic was abruptly stopped by the aggression of the Russian Federation in Ukraine, which led to an energy crisis, a strong migration of war refugees, a significant increase in inflation and a material deterioration in consumer and business sentiment. The Bank Pekao Capital Group has met these numerous challenges.
Bank Pekao was involved in helping war victims, both by supporting humanitarian activities and volunteering, as well as by preparing a free banking offer for customers from Ukraine. The Bank actively participated in assistance programs for customers affected by the increase in interest rates (government credit holidays, contribution to the Borrower Support Fund) and ensured the stability of the banking sector (participation in the voluntary institutional protection system). As the bank of first choice for most large Polish enterprises, Bank Pekao actively supported its clients in the energy sector in ensuring the stability of the Polish market in the light of sanctions imposed on Russia. In these demanding conditions, the Pekao Group achieved good results, demonstrating a resilient business model based on a strong balance sheet and effective risk management. In addition, in the supply chain and towards customers, the bank enforced the right attitude towards the aggressor country, with the use of the Yale University list.
2022 is the second year of two strategies of the Pekao Group until 2024 - financial strategy and sustainable development. The Bank showed a significant increase in the scale of operations, while ensuring that it was targeted at the segments most resistant to changes in the economic cycle. We have intensified cost efficiency to support profitability. Traditionally, Bank Pekao has remained a leader among large Polish banks in terms of credit and legal risk management. Referring to its strategic ambitions, the Bank has implemented a number of innovative solutions thanks to which it strengthens its position as one of the leaders in the sector's digital transformation. In a demanding economic environment, Bank Pekao is on the path of achieving the main strategic parameters.
Further tightening of cooperation between Bank Pekao and other PZU Group companies allowed measurable benefits to be realized in key strategic areas: bancassurance and assurbanking. At the same time, we still see great potential in the development of the product offer and the use of distribution channels as well as expanding the customer base. In the face of the digital transformation of the financial sector, we also do not stop striving to identify and implement operational synergies. In the dynamically changing conditions, cooperation and possible synergies in the field of sustainable development and ESG banking and insurance solutions for customers of the entire Group become particularly important.
From the perspective of the financial sector, 2022 was a year of testing the stability of business models and in these difficult conditions both the resilience of the Bank Pekao Capital Group and the cooperation within the PZU Capital Group worked effectively. We have remained a reliable and stable business partner for our clients, and they reciprocated us with the growing scale of operations entrusted to us.
Together with the Supervisory Board, we attach great importance to the sustainable development and responsible activities of Bank Pekao supporting the implementation of its business goals and the positive and stabilizing effect that the Bank, thanks to its scale, can have on the environment in which it operates. I would also like to emphasize the consistent development based on ESG factors (Environment, Social Responsibility and Corporate Governance) which strongly fit into the strategy of responsible business of the entire PZU Group, which, as the largest financial institution in Poland and the entire region of Central and Eastern Europe, can actively support the energy transformation Polish economy. As the Supervisory Board, we will support Bank Pekao in further improving competences in the area of ESG and even stronger emphasis on the sustainable development policy in both commercial and operational activities in the new strategy of the Bank.
To sum up, on behalf of the Supervisory Board, we are convinced that Bank Pekao will continue to consistently strengthen its leading position in the banking industry in Poland. I am also sure that with all stakeholders in mind, the Bank will continue to strive for a sustainable increase in the company's value.
This year, external conditions seem to be still demanding for Bank Pekao. The economic slowdown results in a moderation in the growth rate of credit volumes. The MREL requirements, the continuing unfavorable legal environment around FX housing loans and the still high inflation, although with the prospect of moderation, are also significant challenges.
On behalf of the Supervisory Board, I would like to thank the Management Board and all employees of the Bank Pekao Capital Group for their great commitment, achievement of business and transformational goals in this environment that is demanding for everyone. I would also like to thank all the Bank's Stakeholders for their trust. I would also like to emphasize that the Supervisory Board will exercise due diligence to ensure that all decisions of the Management Board are made with a view of building the Bank's value for shareholders and that Pekao's activities are carried out on the basis of the highest regulatory, corporate and ethical standards.
Beata Kozłowska-Chyła, PhD
Chairwoman of the Supervisory Board of Bank Pekao S.A.